What is a Target Operating Model and Why is it Needed
A Target Operating Model (TOM) is a comprehensive strategic framework designed to align an organisation’s structure, functions, and processes with its overarching vision and mission. It serves as a blueprint for organising resources, workflows, and capabilities in the most effective way to support long-term goals, operational excellence, and the delivery of value to stakeholders.
The Government’s New Towns Task Force’s report in September 2025 identified 12 potential New Towns and proposed these are delivered by Development Corporations. A Development Corporation charged with delivering a large-scale urban development should at the very onset put in place a robust TOM before commencing a delivery programme to ensure strategic cohesion, operational readiness, and delivery efficiency.
Key Benefits of Implementing a Target Operating Model:
In the context of large-scale urban development, particularly in homebuilding programmes that include infrastructure and community infrastructure a well-structured TOM delivers a wide range of benefits that directly contribute to the success and resilience of an urban development delivery body such as a Development Corporation by proving for:
- Strategic Alignment: Provides vision and direction that aligns with long-term goals and investment plans.
- Operational Efficiency: Maps out processes and procedures aligning development, planning, construction and asset management.
- Enhanced Governance and Risk Management: Defines roles and responsibilities, compliance and risk management.
- Better Stakeholder Management: Customer focused, improving delivery for residents, investors, and government partners with consistency of standards and transparency improving trust with public and private stakeholders.
- Agility and Scalability: Responds to market shifts, supports growth and innovation.
- Improved Financial Management: Implements cost control and creates investment ready opportunities.
- Talent and Capability Optimisation: Building a workforce that is aligned with business needs, with skills development.
A Target Operating Model Framework for Urban Development
An effective Target Operating Model (TOM) for an urban development organisation comprises a set of integrated components that collectively guide delivery, performance, and long-term value creation.
1. Strategic Foundation
A strong strategic foundation anchors the TOM. The organisation must articulate a clear vision and mission focused on delivering mixed-use, well-serviced communities supported by high-quality infrastructure and amenities.
2. Core Operating Pillars
a) Business Capabilities
The organisation requires end-to-end capabilities across the development lifecycle, including planning, land acquisition, infrastructure delivery, design and construction management, procurement, marketing, and long-term asset stewardship. Effective community engagement, strategic partnerships, and sound financial structuring are also essential to creating sustainable, people-centred places.
b) Organisational Structure and Governance
A central leadership team typically sets strategic direction, oversees finances, and develops business cases, while regional or project-based units manage local delivery. A clear governance model supported by roles such as CEO, CFO, and Head of Development, along with investment, audit, and compliance committees enables accountable, timely decision making and transparent reporting.
c) Key Processes
The TOM should establish a structured development lifecycle, with stage gates from feasibility through approvals, design, construction, and post-completion operations. Supporting processes include investment appraisal, regulatory compliance, stakeholder reporting, and customer engagement.
d) Data and Digital Infrastructure
A modern TOM relies on strong digital architecture. Integrated systems including GIS, BIM, CRM, and project management platforms should feed into a centralised data environment. This enables real-time monitoring of project progress, financials, ESG metrics, and operational KPIs, supporting accurate forecasting and evidence based decision making.
e) People and Culture
Workforce strategy should blend a skilled core team with flexible, project-based resources and specialist third-party partners. The culture must champion innovation, inclusivity, and sustainability, reflected both in internal practices and in how communities are engaged.
f) Performance Management
Performance must be routinely monitored through metrics such as Internal Rate of Return (IRR), schedule and cost performance, ESG outcomes, and customer satisfaction. Monthly and quarterly reviews provide insights that enable course corrections and reinforce continuous improvement.
Target Operating Model Implementation Roadmap
A TOM will require an implementation Roadmap delivered in stages before its considered as being effected.
- Current State Assessment: Conduct a diagnostic review of existing capabilities, systems, and workflows, supported by a gap analysis to identify areas for transformation.
- Design of the Future-State Model: Develop a tailored TOM framework that reflects the unique context and objectives of the organisation, drawing from proven models where appropriate.
- Stakeholder Alignment: Engage key internal and external stakeholders to validate the model and ensure their support through structured consultation and co-design.
- Implementation Planning: Develop a detailed, phased rollout plan, potentially organised by function, geography, or project type. Pilot programmes may be used to test and refine the model before full deployment.
- Monitoring and Continuous Improvement: Establish a feedback loop using KPIs, data analytics, and stakeholder insights to refine the TOM on an ongoing basis and embed lessons learned.
Conclusion
A well-designed Target Operating Model is essential for any urban development delivery body such as a Development Corporation seeking to deliver complex, long-term infrastructure and housing programmes effectively. It not only aligns people, processes, and systems with strategic intent but also fosters transparency, trust, and agility in delivery.
The House of Lords Built Environment Committee’s recent Report, ‘New Towns: Laying the Foundations’ published in October 2025 has a Chapter on Governance and Stewardship covering Development Corporations. The report sets out many recommendations to encourage success and establishing Development Corporations with robust TOM’s can greatly support this success.